This text was written by SuperScale chief working officer Nikola Mitic.
The overwhelming majority of cellular gaming’s historical past has been characterised by exponential development. We loved the ‘something goes’ period of early cellular gaming, then the period of hypercasual dominance by means of low-cost and hyper-targeted UA.
Now, the percentages really feel stacked towards us. It’s like somebody turned up the problem setting from ‘Intermediate’ to ‘Professional’, or frankly cranked all of it the way in which as much as ‘Hellish’.
This isn’t melodrama: the unofficial slogan of the current Pocket Gamer Connects in London appeared to be “survive to ‘25”. The golden age of cellular video games, at the least from a enterprise perspective, is clearly over for good. We’re now in what I prefer to name the ‘grind’ or ‘squeeze’ section the place it’s far more troublesome – however nonetheless doable to win.
We’re all effectively conscious of the element of how privacy-first advertising and marketing has disrupted a enterprise mannequin that was rampantly profitable. But dialogue of cellular’s current interval of relative malaise typically contains obscure mentions of the “macroeconomy”.
What does this broad time period actually imply for cellular recreation makers in 2024?
Financial system 101
The macroeconomy merely means the entire financial system; all of the industries, customers, companies and decision-makers inside it. Over the previous few years numerous ‘black swan’ occasions – virtually unpredictable and extreme financial threats – have drastically upset the broader financial system.
Elements just like the Covid-19 pandemic or battle in Ukraine influence the world’s financial system in real-time. However, why does this matter for cellular video games? As a result of this isn’t one thing our business is shielded from. As a part of the leisure business, we’re actually acutely susceptible to it.
We naturally look at the cellular video games business as its personal closed ecosystem, learning and integrating the components inside our slim scope to do enterprise and develop video games as successfully as doable.
But the macro, wider, financial system looms over all industries. It has a tangible influence on customers’ livelihoods, spending energy and leisure time, which after all are all important to the success of cellular gaming, significantly as extra informal video games rely extra closely on IAPs.
On the identical time, as customers re-evaluate whether or not they can actually afford these further gems or that cool pores and skin, we’re feeling the squeeze ourselves.
UA prices are considerably greater, margins are considerably decrease, and funding within the video games business from VCs and strategic buyers is down.
Nikola Mitic
UA prices are considerably greater, margins are considerably decrease, and funding within the video games business from VCs and strategic buyers is down. Whereas we’re definitely on the mercy of many components exterior our management, it’s additionally true that overhiring throughout the pandemic and overpriced acquisitions imply we’ve additionally contributed to the state of affairs.
Will 2024 be totally different?
Vital layoffs and cost-saving measures, together with a slowdown in new recreation launches, will go some approach to balancing the books within the short-term. Nevertheless it additionally represents a big talent drain, with gifted builders leaving corporations and, in some circumstances, the whole business.
Smaller growth groups at the moment are unable to tackle the duty of constructing larger and higher video games. This second wave of layoffs could also be adopted by a 3rd as corporations establish the efficiencies they really have to make, versus snap layoffs.
It appears like a platitude given the extent of the layoffs, however we are going to hopefully see a few of these builders arrange unbiased studios to work on new, artistic ideas.
The financial outlook for the remainder of the yr is unsure, which means we’ll possible be competing for decrease total client wallets and shrinking income.
Entry to capital will proceed to be difficult, with still-high rates of interest and VC funding taking time to circulation again into gaming. The influence of speedy advances in AI for advertising and marketing, in-game belongings and even programming is but to be actually measured in any significant manner.
In the interim at the least, we will’t depend on the great previous days of the hit-factory method the place new and ever extra profitable releases repeatedly discovered success every quarter. We have seen corporations like Playtika sluggish or halt total growth of latest titles to as an alternative concentrate on constructing upon the success of their current portfolios.
The most secure guess could also be to lean on the success of recognized cellular gaming IPs by launching sister titles in rising, much less saturated genres and markets.
Nikola Mitic
And whereas we have seen different builders like Supercell function on a reasonably ruthless mannequin of culling underperforming titles, it is essential to do not forget that these are singular builders which were in enterprise for many years, defining the business and having immense experience in consequence.
Methods ahead
With SuperScale’s current survey of a whole bunch of cellular recreation builders exhibiting that 78% choose to work on new titles, and naturally players’ enthusiasm for brand new releases, it’s an unlucky actuality that we’re unlikely to see a flood of latest hits driving important income in 2024.
There’ll after all be standout successes like Scopely’s Monopoly GO, the place game-making experience, considerable capital and nice IPs fuse to create one thing superb.
For these studios that may’t resist engaged on new video games, the most secure guess could also be to lean on the success of recognized cellular gaming IPs by launching sister titles in rising, much less saturated genres and markets.
But the overwhelming majority of corporations might be pressured to look inwards and even backwards to scale income from their lively and legacy titles by means of smarter advertising and marketing and stay ops.
Like platform holders’ privateness modifications, the macroeconomy is out of our management as recreation builders. Whereas taking part in on Professional, we finally have to concentrate on small, significant modifications to the issues we will management.
